WestPoint Stevens first-lien agent objects to loss of rights under proposed case dismissal

By Caroline Salls

Pittsburgh, Sept. 7 - WestPoint Stevens Inc.'s proposed dismissal of its Chapter 11 case drew objection from its first-lien agent and collateral trustee, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Beal Bank SSA, the successor first-lien agent and collateral trustee under the company's pre-bankruptcy credit agreement, said the proposed case dismissal would strip it of its rights to adequate protection under bankruptcy law.

According to the objection, the bank's rights as first-lien agent include being granted post-bankruptcy liens and security interests against post-bankruptcy collateral; having monthly interest payments made on the debt and receiving timely and prompt payment of first-lien agent fees and expenses.

Beal Bank said under bankruptcy law the right to enforce liens "shall survive the conversion of dismissal of any of the [company's] cases."

Also, according to the objection, WestPoint Stevens is in default of the adequate protection order and the purchaser of all of its assets has not complied with the asset sale order because the first-lien agent's fees and expenses have not been paid.

"The [company] should not be allowed to dismiss their Chapter 11 cases to escape the enforcement of orders of this court," Beal said in the objection.

A hearing on case dismissal is scheduled for Tuesday.

The West Point, Ga.-based textile firm filed for bankruptcy on June 1, 2003. Its Chapter 11 case number is 03-13532.

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